The UK Financial Conduct Authority has published consultative guidance on how its financial promotion requirements apply to promotions on social media. By definition, all financial promotions should be fair, clear and not misleading. The FCA’s financial promotion rules are deliberately designed to be technology neutral and apply across all channels used to advertise, including social media.
The FCA last published guidance on its approach to the supervision of financial promotions in social media in 2015 and since then, the channels used to promote financial products have changed considerably. The use of video, chat, emojis and GIFs have all increased significantly in the last few years. In addition, social media itself has become an increasingly vital part of firms’ marketing strategies, allowing them to reach a mass audience at increasing speed and frequency. While this has helped firms communicate with consumers more effectively, poor quality financial promotions can lead to significant consumer harm due to their wide reach and the complex nature of financial services.
The proposed enhanced guidance and clarity around regulatory expectations will sit alongside the Consumer Duty which comes into effect at the end of July 2023. Specifically, the bar will be raised above the requirement of ‘clear, fair and not misleading’ to a requirement for firms ‘to act to deliver good outcomes for retail customers’ and the FCA is clear that it will use the guidance to supplement its expectations for communications on social media.